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Power company accepts it breached consumer law

DAVID MARK: The energy company AGL has been fined more than one-and-a-half million dollars for engaging door-to-door salesmen who used lies and tricks to persuade people to change electricity providers.

The marketing company involved, CPM, has also been fined.

CPM says it was an isolated incident and insists its salesman saved the customer $120 on his power bill.

Simon Lauder reports.

SIMON LAUDER: The Federal Court has ordered AGL to pay $1.55 million for breaching Australian consumer law in two separate incidents involving door-to-door sales in Victoria and South Australia.

The chairman of the Australian Competition and Consumer Commission, Rod Sims:

ROD SIMS: AGL representatives knocking on people's doors, they engaged in false and misleading representations. They said they were there representing an investigation department, or the Coburg investigation unit, when in fact, and therefore trying to give some authority to their presence when in fact, that wasn't the case.

SIMON LAUDER: The marketing company engaged by AGL has also been fined $200,000. Alex McKay is the chairman of that company, CPM Asia Pacific.

ALEX MCKAY: It wasn't a mass advertising campaign that was false and misleading; it wasn't a large airline colluding on the price of freight; it was one guy on one day in Coburg who called on three customers and made a number of comments that were just quite frankly not true about who he was representing, where he was from, and I think it was essentially to try and get a sale.

SIMON LAUDER: Sounds like he was basically trying to use lies and tricks to make a sale.

ALEX MCKAY: Well look, at the end of the day he saved the customer $120 based on the bill comparison, but I'm not quite sure that how he went about it was in any way, shape, or form what he had been trained to do.

STEPHEN MIKKELSEN: We accept the decision of the Court and we accept the fine.

I mean ultimately, we are responsible because we are the retailer.

SIMON LAUDER: Is one-and-a-half million dollars a significant fine for AGL? I think you had a six month profit of $365 million recently.

STEPHEN MIKKELSEN: One-and-a-half million dollars is a very substantial fine for AGL.

SIMON LAUDER: In February this year AGL and Energy Australia announced they would no longer use door-to-door sales tactics.

Mr Mikkelsen says that decision has hurt AGL commercially as its competitors continue to make sales.

He says AGL's fine should serve as a warning to the industry.

STEPHEN MIKKELSEN: I don't think you'd have to have too many fines of one-and-a-half million dollars to make it commercially not worthwhile. I guess what I'm saying is that it is successful in gaining customers. I think the problem with it is that it's very, very hard to control and you cannot guarantee that customers actually know the transactions and contracts they're entering into, and they don't know for sure what the level of savings they're going to make.

It's a really high pressure form of selling to a customer, and in my view, for something like electricity or gas, it's just not appropriate.

SIMON LAUDER: The ACCC's (Australian Competition and Consumer Commission) case against AGL could end up having a much wider impact.

It's asked the court to rule that a 'Do Not Knock' sticker on a door is the same as a householder asking a salesman to leave, making it much riskier for salespeople to ignore those stickers.

The head of the group Consumer Action, Gerard Brody, wants to know why AGL challenged the ACCC's case on the 'Do Not Knock' sticker.

GERARD BRODY: We'd like to think AGL would be championing consumer rights by acknowledging that a 'Do Not Knock' sticker is a request to leave, and thus encouraging other retailers who still use this form of marketing to respect consumer wishes.

SIMON LAUDER: AGL's retail manager, Stephen Mikkelsen, says he wants the court to decide, so consumers have more certainty.

STEPHEN MIKKELSEN: In a voluntary sense, there's only ourselves, Energy Australia, and I believe Lumo have pulled out. So there's still a number of large parties out there doorknocking, and we just want it very clear from a legal point of view what our customers' rights are around putting up a 'Do Not Knock' sticker.

SIMON LAUDER: The Federal Court has reserved its judgement on whether the 'Do Not Knock' sticker constitutes a request to leave.